Albino v. Global Equipment USA, Ltd.

Filing 93

DECISION AND ORDER denying 79 Motion to Dismiss for Lack of Jurisdiction without prejudice consistent with this Decision and Order; denying 80 Motion to Dismiss for Lack of Jurisdiction without prejudice consistent with this Decision and Order; and terminating 91 Affidavit. Signed by Hon. Michael A. Telesca on 1/26/17. (JMC)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK

ALEXANDER ALBINO,
Plaintiff,
-vs-

DECISION and ORDER
No. 6:14-cv-06519(MAT)

GLOBAL EQUIPMENT USA, LTD.,
Defendant.

GLOBAL EQUIPMENT USA, LTD.,
Defendant/Third-Party Plaintiff,
-vsH. P. NEUN COMPANY, INC., ISOWA
AMERICA, INC. and ISOWA CORPORATION,
Third-Party Defendants.

INTRODUCTION
Alexander

Albino

(“Plaintiff”),

represented

by

counsel,

instituted this diversity action against Global Equipment USA, LTD.
(“Global”), alleging causes of action based on strict products
liability and negligence as the result of injuries he sustained on
September 8, 2012, while he was employed at third-party defendant
H.P. Neun Company, Inc. (“H.P. Neun”). Global instituted a thirdparty action on January 18, 2016, asserting claims for contribution
and indemnification against Arvco Container Corp. (“Arvco”), H.P.
Neun, ISOWA Corporation (“IC”), and ISOWA America, Inc. (“IAI”).

On August 18, 2016, this Court issued a decision and order
denying Global’s motion to dismiss the complaint for lack of
personal jurisdiction. On September 20, 2016, IC filed a motion to
dismiss for lack of personal jurisdiction, and IAI filed a motion
to dismiss for failure to state a claim and for lack of personal
jurisdiction. On October 12, 2016, the Court granted Global an
extension

of

time

to

respond

to

IC’s

and

IAI’s

motions.

On

October 26, 2016, Global timely responded to the motions to dismiss
by filing a cross-motion to amend the third-party complaint. All
three motions are fully submitted and ready for decision.
As discussed more fully herein, the Court grants Global’s
request

to

conduct

jurisdictional

discovery;

denies

without

prejudice IC’s motion to dismiss for lack of personal jurisdiction
with leave to renew following jurisdictional discovery; denies
without prejudice IAI’s motion to dismiss for failure to state a
claim and for lack of personal jurisdiction with leave to renew
following jurisdictional discovery; and holds in abeyance Global’s
cross-motion to amend the third-party complaint pending the Court’s
resolution of IC’s and IAI’s jurisdictional challenges.
FACTUAL BACKGROUND
While working at H.P. Neun on September 8, 2012, Plaintiff
sustained a crush-type hand injury while he was operating a Flexo
Die Cutter Slotter, Model DCFS-7 (“the Machine”). The Machine was
manufactured by IC in 1979. IC is a foreign corporation constituted

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under the laws of Japan, with its principle offices in Nagoya,
Japan. IC specializes in manufacturing large scale industrial
corrugators and finishing equipment for use in the manufacturing of
finished cardboard products. IAI, an Arizona corporation with a
domestic address in Phoenix, is a wholly-owned subsidiary of IC.
IAI is responsible for new machine and parts sales for IC, as well
as for providing service and support for IC in North and South
America.
In its motion to dismiss, IC avers that the Machine was
ordered on November 19, 1979, by Colorado Container Corporation
(“CCC”), a non-party, and was shipped to that company in May of
1980. Pursuant to the terms of the sales documents, the Machine was
to be installed at CCC by Vahan A. Hussissian & Associates (“VAH &
Assocs.”), also a non-party, in July of 1980. IC and IAI aver that
VAH & Assocs., a former sales agent for IC, is not related in any
way to IC or IAI, and is not a predecessor or successor of IC or
IAI. IC also states that IAI, which was not incorporated until
2002, did not have any role in the original sale and distribution
of the Machine. Neither IC nor IAI played a role in the 2008 sale
of the Machine to H.P. Neun, brokered by Global. IC states that IAI
is a wholly-owned subsidiary of IC, which is the IAI’s sole
shareholder.

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IC’S AND IAI’S MOTIONS TO DISMISS
FOR LACK OF PERSONAL JURISDICTION
I.

Rule 12(b)(2) Standard
A

party

may

assert

the

defense

of

lack

of

personal

jurisdiction by motion. See FED. R. CIV. P. 12(b)(2). When faced
with such a motion, the “plaintiff bears the burden of showing that
the court has jurisdiction over the defendant.” Metro. Life Ins.
Co. v. Robertson-Ceco Corp., 84 F.3d 560, 566 (2d Cir. 1996).
“‘Prior to discovery, a plaintiff challenged by a jurisdiction
testing motion may defeat the motion by pleading in good faith, see
FED.

R.

CIV.

P.

jurisdiction,’”

11,

i.e.,

by

legally
making

sufficient
a

‘prima

allegations

facie

showing’

of
of

jurisdiction.” Jazini v. Nissan Motor Co., 148 F.3d 181, 184
(2d Cir. 1998) (citations and quotation omitted). This showing may
be made through “affidavits and supporting materials[,]” Marine
Midland Bank, N.A. v. Miller, 664 F.2d 899, 904 (2d Cir. 1981),
containing “an averment of facts that, if credited . . . , would
suffice

to

establish

jurisdiction

over

the

defendant.”

Robertson–Ceco Corp., 84 F.3d at 567 (quotation omitted). Where, as
here, the jurisdictional “issue is addressed on affidavits, all
allegations are construed in the light most favorable to the
plaintiff and doubts are resolved in the plaintiff’s favor[.]” A.I.
Trade Fin., Inc. v. Petra Bank, 989 F.2d 76, 79–80 (2d Cir. 1993).

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II.

General Legal Principles Regarding In Personam Jurisdiction
“[T]he amenability of a foreign corporation to suit in a

federal court in a diversity action is determined in accordance
with the law of the state where the court sits, with ‘federal law’
entering the picture only for the purpose of deciding whether a
state’s assertion of jurisdiction contravenes a constitutional
guarantee.” Arrowsmith v. United Press Int’l, 320 F.2d 219, 223
(2d Cir. 1963) (in banc). Thus, a court assessing whether personal
jurisdiction is authorized “must look first to the long-arm statute
of the forum state, in this instance New York.” Bensusan Rest.
Corp. v. King, 126 F.3d 25, 27 (2d Cir. 1997) (citation omitted).
“If the exercise of jurisdiction is appropriate under that statute,
the court then must decide whether such exercise comports with the
requisites of due process.” Id. (citation omitted). Thus, in
resolving the issue of personal jurisdiction in a diversity suit,
a district court must follow a two-step process. Robertson-Ceco
Corp., 84 F.3d at 567 (citation omitted).
III. Discussion
Global asserts that specific jurisdiction over IAI is proper
under New York’s long-arm statute, specifically, CPLR 302(a)(1) and
CPLR 302(a)(3)(i). Global concedes that IC is not subject to
general jurisdiction under New York Civil Practice Law and Rules
(“CPLR”) 301. (See Dkt #79-10, at 6-9). Instead, Global invokes
specific jurisdiction under CPLR 302(a)(1) and 302(a)(3)(i).

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Turning

first

to

Global’s

regarding IAI, this section
jurisdiction

“over

any

argument

under

CPLR

302(a)(1)

allows a court to exercise personal

non-domicialiary,

or

his

executor

or

administrator, who in person or through an agent: (1) transacts any
business within the state or contracts anywhere to supply goods or
services in the state. . . .” N.Y. CIV. P. L. & R. 302(a)(1). “New
York

courts

evaluating

specific

jurisdiction

under

section

302(a)(1) look to both the language of the statute and the relation
between the alleged conduct and the cause of action.” Best Van
Lines, Inc. v. Walker, 490 F.3d 239, 246 (2d Cir. 2007). Thus,
“[t]o

determine

the

existence

of

jurisdiction

under

section

302(a)(1), a court must decide (1) whether the defendant ‘transacts
any business’ in New York and, if so, (2) whether this cause of
action ‘aris[es] from’ such a business transaction.” Id. (citing
Deutsche Bank Sec., Inc. v. Montana Bd. of Invs., 7 N.Y.3d 65, 71
(2006)). As an initial matter, the Court notes that “[t]he showing
necessary for a finding that a defendant ‘transacted business’
within the meaning of [CPLR] section 302(a)(1) is considerably less
onerous than that required for a finding that a defendant was doing
business under [CPLR] section 301.” Hollins, 469 F. Supp.2d at 76
(quoting ESI, Inc. v. Coastal Corp., 61 F. Supp.2d 35, 57 (S.D.N.Y.
1999);

citing

Gleason

Works

v.

Klingelnberg–Oerlikon

Vertriebs–GmbH, 58 F. Supp.2d 47, 50 (W.D.N.Y. 1999)).

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Geartec

Global has proffered evidence, in the form of purchase orders
and invoices, that IAI sold and shipped parts to H.P. Neun yearly,
during the period from 2010, to 2016. In addition, an employee of
IAI visited H.P. Neun in 2015, for a three-day service call
regarding the Machine. (See Exhibits to Affidavit of Stephen M.
Bregande (“Bregande Aff.”) (Dkt #83-11)).
The Second Circuit has observed that New York State courts’
decisions, “at least in their rhetoric, tend to conflate the
long-arm statutory and constitutional analyses by focusing on the
constitutional

standard:

whether

the

defendant’s

conduct

constitutes ‘purposeful availment.’” Chloe v. Queen Bee of Beverly
Hills, LLC, 616 F.3d 158, 169 (2d Cir. 2010) (quoting Best Van
Lines, 490 F.3d at 247; brackets omitted in original). “Thus, a
defendant need not be physically present in New York to transact
business there within the meaning of the first clause of section
302(a)(1)[.]”

Id.

(citation

omitted).

Accordingly,

courts

in

New York have held that CPLR 302 “is a ‘single act statute’ and
proof of one transaction in New York is sufficient to invoke
jurisdiction, even though the defendant never enters New York. . .
.” Kreutter, 527 N.Y.S.2d 195, 522 N.E.2d at 43; see also Chloe,
616 F.3d at 170-71 (“[Defendant’s employee] Ubaldelli’s single act
of shipping a counterfeit Chloé bag might well be sufficient, by
itself, to subject him to the jurisdiction of a New York court
under section 302(a)(1). We need not, however, decide that question

-7-

because, in this case, Queen Bee also operated a highly interactive
website offering such bags for sale to New York consumers, and
engaged in fifty-two other transactions where merchandise was
shipped to New York. Viewed in their totality, these contacts
sufficiently demonstrate Ubaldelli’s purposeful availment of the
benefits of transacting business in New York.”).
As for the second part of CPLR 302(a)(1)’s test, “a suit will
be deemed to have arisen out of a party’s activities in New York if
there is an articulable nexus, or a substantial relationship,
between the
New

York.”

claim
Best

asserted
Van

Lines,

and

the

Inc.,

actions
490

F.3d

that
at

occurred
246.

in

Global

characterizes its claim against IAI as seeking contribution based
upon a theory that IAI owed Plaintiff a duty to warn of defects in
the Machine, as well as to warn of the dangers in the ongoing use
of the Machine, when IAI continued to provide H.P. Neun with parts
for the Machine after H.P. Neun took possession of the Machine in
2008. (See Dkt #83-12 at 4). Global notes that under general tort
rules, an individual may be found negligent because of a failure to
warn another of known dangers, or dangers of which he had reason to
know; this duty “commonly is imposed because of some special
relationship, frequently economic, not only for those bearing
special responsibilities . . . .” (Dkt #83-12 at 4 (quoting
Schumacher v. Richards Shear Co., 59 N.Y.2d 239, 246-47 (1983)).
Global argues that such a “special relationship” existed between

-8-

IAI and H.P. Neun because of their economic relationship based on
IAI’s ongoing sale and shipment to H.P. Neun of parts for the
Machine; on IAI’s holding itself out as an expert in the sale of
parts and service for the Machine; and on IAI’s knowledge that the
parts it sold to H.P. Neun would be used in the Machine, which IAI
knew was located at H.P. Neun’s facility in Lyons, New York.
While IAI initially argued that there is no evidence that it
“transact[ed] any business,” CPLR 302(a)(1), in New York, it has
pivoted to arguing that there is no articulable nexus between its
sales and shipments of parts for the Machine to H.P. Neun and the
claims asserted against it by Global. In particular, IAI argues
that none of the parts it shipped were related to or involved in
Plaintiff’s accident, or are alleged to have been defective or
dangerous. Therefore, IAI argues, it could not have a breached any
duty to warn of defects or dangers, and Global’s underlying theory
of liability is not cognizable and without merit. However, New York
courts have stated that “it is not required, for the purposes of
[a] motion [challenging jurisdiction], to establish defendant’s
responsibility by the same degree of proof required upon the trial
of the action. This dispute bears upon the question of ultimate
liability, and in order to ascertain whether New York courts have
jurisdiction, it is not necessary to determine the existence or
theory of liability in advance of trial.” Buckley v. Redi-Bolt,
Inc., 49 Misc. 2d 864, 869, 268 N.Y.S.2d 653, 657–58 (Sup. Ct.

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1966). Indeed, the New York Court of Appeals “consistently” has
described the nexus inquiry under CPLR 302(a)(1) as “relatively
permissive[.]” Licci v. Lebanese Canadian Bank, 20 N.Y.3d 327, 339
(2012) (collecting cases).
With regard to IC and Global’s argument under CPLR 302(a)(1),
Global does not assert that IC itself transacted business in
New York State. Rather, Global argues that “[IC], through its agent
[IAI], transacted business in New York and contracted to supply
goods and services in New York, thereby bringing [IC] under the
jurisdiction of New York courts pursuant to CPLR 302(a)(1).”
(Dkt #83-12, at 9; see also PATPC ¶¶ 61-63 (alleging, as a first
cause of action, that IC, “either in person or through its agent
transacts or transacted business within New York”; “either in
person or through its agent contracted to supply goods or services
in New York”; and “either in person or through its agent regularly
does, or solicits business, or engages in another persistent course
of conduct, or derives substantial revenue from goods used or
consumed or services rendered, in New York”)).
To establish personal jurisdiction under the “transacting
business” prong of Section 302(a)(1), “two requirements must be
met: (1) [t]he defendant must have transacted business within the
state; and (2) the claim asserted must arise from that business
activity.” Sole Resort, S.A. de C.V. v. Allure Resorts Mgmt., LLC,
450 F.3d 100, 103 (2d Cir. 2006) (citation omitted). With regard to

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the “transacting business” prong of CPLR 302(a)(1), IC is correct
that Global’s theory of jurisdiction depends on a finding that IAI
was IC’s “agent in connection with IAI’s parts sales to H.P. Neun.”
(Dkt #90 at 3). As IC notes, the fact that a corporation is a
wholly owned subsidiary of another corporation does not necessarily
give rise to an agency relationship between the two entities. E.g.,
Kiobel v. Royal Dutch Petroleum Co., 621 F.3d 111, 194 (2d Cir.
2010) (citing Kingston Dry Dock Co. v. Lake Champlain Transp. Co.,
31 F.2d 265, 267 (2d Cir. 1929) (L. Hand, J.), aff’d, 133 S. Ct.
1659 (2013). IC argues Global cannot establish jurisdiction under
CPLR 302(a)(1) because no formal agency relationship exists between
itself and IAI. (Dkt #90 at 3-7).
However, for jurisdictional purposes, a “[p]laintiff need not
establish a formal agency relationship between [a] defendant[ ] and
[the agent doing business in New York].” Ingenito v. Riri USA,
Inc., 89 F. Supp.3d 462, 477 (E.D.N.Y. 2015) (quoting Kreutter v.
McFadden Oil Corp., 71 N.Y.2d 460, 467 (1988)). Rather, “[a]
plaintiff attempting to establish personal jurisdiction over a
defendant who has never been present in the state and only acted
through subsidiaries or agents need only show that the subsidiary
‘engaged in purposeful activities in this State,’ that those
activities were ‘for the benefit of and with the knowledge and
consent of’ the defendant, and that the defendant ‘exercised some
control over’ the subsidiary in the matter that is the subject of

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the lawsuit.” Ingenito, 89 F. Supp.3d at 476 (quoting Kreutter, 71
N.Y.2d at 467; citing CutCo Indus., Inc. v. Naughton, 806 F.2d 361,
366 (2d Cir. 1986) (“To be considered an agent for jurisdictional
purposes, the alleged agent must have acted in the state ‘for the
benefit of, and with the knowledge and consent of’ the non-resident
principal.”); other citation omitted).
After careful review of the parties’ motions, the Court has
elected to exercise its discretion to grant Global’s request for
leave to conduct jurisdictional discovery. Where a plaintiff fails
to make a prima facie showing of personal jurisdiction, it is well
established in this Circuit that a district court may allow the
plaintiff to conduct discovery on jurisdictional questions so long
as it has “made a sufficient start towards establishing personal
jurisdiction.” Hollins v. U.S. Tennis Ass’n, 469 F. Supp. 2d 67,
70-71 (E.D.N.Y. 2006) (quoting Uebler v. Boss Media, 363 F. Supp.
2d 499, 506-07 (E.D.N.Y. 2005)); see also Winston & Strawn v. Dong
Won Sec. Co., No. 02 CIV. 0183(RWS), 2002 WL 31444625, at *5
(S.D.N.Y.

Nov. 1,

2002)

(“A

trial court has

jurisdiction

to

determine its own jurisdiction. A court may allow discovery to aid
in

determining

whether

it

has

in

personam

or

subject

matter

jurisdiction.”) (internal citation omitted; citing, inter alia,
Lakkas v. Liberian M/V Caledonia, 443 F.2d 10, 11 (4th Cir. 1971)
(per

curiam)).

Global

has

“made

a

sufficient

start

toward

establishing jurisdiction, and ha[s] shown that [its] position is

-12-

not frivolous.” PST Servs., Inc. v. Larson, 221 F.R.D. 33, 37
(N.D.N.Y. 2004); accord, e.g, Perkins v. Sunbelt Rentals, Inc.,
No. 514CV1378BKSDEP, 2015 WL 12748009, at *12 (N.D.N.Y. Aug. 13,
2015). Furthermore,

certain facts necessary to establish personal

jurisdiction lie exclusively within IAI’s and IC’s knowledge, in
particular, those related to the precise nature of the relationship
between IC and its wholly-owned subsidary, IAI. See Uebler v. Boss
Media, AB, 363 F. Supp.2d 499, 506 (E.D.N.Y. 2005) (citing Wells
Fargo & Co. v. Wells Fargo Express Co., 556 F.2d 406, 430 n. 4
(2d Cir. 1977)). Finally, the Court finds that “[d]iscovery will
lead to a more accurate judgement than one made solely on the basis
of affidavits in response to the motion.” Winston & Strawn, 2002 WL
31444625, at *5 (citing Peterson v. Spartan Indus., Inc., 33 N.Y.2d
463, 467 (1974)).
GLOBAL’S CROSS-MOTION TO AMEND THE THIRD-PARTY COMPLAINT AND
IAI’s MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM
I.

Standard for Amending under F.R.C.P. 15(a)
Because more than 21 days have elapsed since the filing of

IC’s

and

IAI’s

motions

to

dismiss

the

original

third-party

complaint for lack of jurisdiction and failure to state a claim,
Global must first obtain leave of the Court to file an amended
third-party

complaint.

See

FED. R. CIV. P. 15(a)(1)(A),

(2);

Eskenazi-McGibney v. Connetquot Cent. Sch. Dist., 84 F. Supp.3d
221, 225 (E.D.N.Y. 2015) (“In the instant matter, in order to amend
the complaint, the Plaintiffs must first obtain leave of the Court
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because the Defendants have not given such consent, and more than
21 days have elapsed since the motions to dismiss were filed.”)
(citation omitted).
While the “court should freely give leave [to amend] when
justice so requires[,]” FED. R. CIV. P. 15(a)(2), it “has discretion
to deny leave for good reason, including futility, bad faith, undue
delay, or

undue

prejudice

to

the

opposing

party.”

Holmes

v.

Grubman, 568 F.3d 329, 334 (2d Cir. 2009).
II.

Discussion
Here, there is no indication, and IAI does not argue, that

Global has unduly delayed or is not acting in good faith. IAI’s
argument in favor of dismissal is premised on the inability of
Global to state a plausible claim for relief against it. Other
district

courts

in

this

circuit

have

generally

found

it

inappropriate to address the adequacy of pleadings without having
resolved the threshold issue of personal jurisdiction. Perkins,
2015 WL 12748009, at *12 (citing, inter alia, Sokolow v. Palestine
Liberation Org., 583 F. Supp.2d 451, 460 n.9 (S.D.N.Y. 2008) (“It
is inappropriate for the Court to address the adequacy of pleadings
until

the

threshold

issue

of

personal

jurisdiction

is

determined.”); New York v. Mountain Tobacco, 55 F. Supp.3d 301,
314-15 (E.D.N.Y. 2014) (declining to rule on 12(b)(6) motion
pending additional jurisdictional discovery)). Therefore, IAI’s
motion to dismiss for failure to state a claim under Rule 12(b)(6)
is denied without prejudice to refiling after additional discovery.

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The Court likewise denies Global’s motion to amend the third-party
complaint without prejudice. As stated above, the Court declines to
address the

adequacy

of

the

Global’s pleadings

until

it

has

resolved whether IAI is subject to personal jurisdiction.
CONCLUSION
For the reasons discussed above, the Court grants Global’s
request

to

conduct

jurisdictional

discovery;

denies

without

prejudice IC’s motion to dismiss for lack of personal jurisdiction
with leave to renew following jurisdictional discovery; denies
without prejudice IAI’s motion to dismiss for failure to state a
claim and for lack of personal jurisdiction with leave to renew
following jurisdictional discovery; and holds in abeyance Global’s
cross-motion to amend the third-party complaint pending the Court’s
resolution of IC’s and IAI’s jurisdictional challenges.
The limited and expedited discovery proceeding will include
service of document requests by Global upon IAI and IC, and
depositions of two witnesses, one from IAI and one from IC, the
appropriate individuals to be designated by IAI and IC, limited to
answering questions regarding jurisdictional issues. This discovery
is to be completed no later than thirty (30) days from the entry of
this decision and order.
SO ORDERED.
S/Michael A. Telesca
HONORABLE MICHAEL A. TELESCA
United States District Judge
DATED:

January 26, 2017
Rochester, New York
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